Student Finance Plc & Student Roost Investor Presentation - - PowerPoint PPT Presentation

Student Finance Plc & Student Roost Investor Presentation Update

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Sections

• 1. Executive Summary

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• 2. Management Team

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• 3. Portfolio Overview

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• 4. Financial Covenants

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• 5. Operational Update

14 6. Summary 21 Appendix: Financial Calendar and Contacts

SECTION 1 – EXECUTIVE SUMMARY

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1.1 Executive Summary

1. Solid financial performance 2. Internalisation of operations on track through rebrand and changes in management 3. Capital expenditure investment continues 4. Financial covenants satisfied 5. Group portfolio continuing to grow

SECTION 2 – MANAGEMENT TEAM

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2.1 Management Team

Executive Team

Nathan Goddard – Chief Executive Officer

• Nathan has over 20 years of industry experience and was previously Chief Operating Officer at Student Roost
• Previously held senior roles at Student.com, Greystar and Unite

Jeannie Wong(1) – Chief Financial Officer

• Jeannie is a Chartered Accountant with over 10 years’ experience in real estate and finance roles
• Has been with Student Roost since June 2017; will return to Brookfield as Portfolio Manager for Student Roost once Jonathan Hire joins the

business Paul Inglett – Chairman

• Paul was previously the Chief Financial Officer at Center Parcs for 7 years and Group Finance Director at Marston’s plc for 8 years
• Also acts as an Advisor to Brookfield on other Property company investments

Board of Directors

Tim Butler – Founder & Chief Strategist; formerly CEO of Student Roost with over 20 years experience in the sector Brookfield Representatives

• Zachary Vaughan – Managing Partner of Brookfield Property Group and is Head of Brookfield’s European real estate investments group; 20

years’ experience in the real estate sector

• Kevin McCrain – Managing Director of Brookfield Property Group and is responsible for advising on all legal aspects of Brookfield’s real

estate platform, specifically focusing on European acquisitions and dispositions

• Brad Hyler – Managing Director of Brookfield Property Group and is responsible for leading Brookfield’s European real estate group’s

business development efforts in Europe

• Natalie Adomait – Vice President of Brookfield Property Group and is involved in the Asset Management for Brookfield’s European real estate

investments

(1) Jonathan Hire will be the future CFO and will join Student Roost in July 2018. Jonathan is a Chartered Accountant with extensive finance experience; his current role is the Group Financial Controller at Enterprise Inns plc

SECTION 3 – PORTFOLIO OVERVIEW

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3.1 Student Finance Plc Portfolio Overview

Newcastle

1 Property 371 Beds

• Newcastle University co-investing in one of the UK’s

largest regeneration projects

• 24 acre £350m Science Central in construction
• £200m multi-use Kings Gate Building

Sheffield

2 Properties 1,512 Beds

• State of the art £81m Diamond building for engineering

students and staff

• UoS invested over £100m in a new Arts & Humanities

facility / other building refurbishments

Nottingham

2 Properties 1,796 Beds

• £200m investment in Jubilee Campus
• Plans for further £200m investment over next 10 years to

double number of engineering students

• NTU invested over £250m over last decade

Leicester

7 Properties 1,849 Beds

• UoL invested £42m sciences facility, the largest

investment in medical teaching

• DMU undergoing £136m campus transformation including

new property and refurbishments

Wrexham

1 Property 156 Beds

• Glyndwr University have released a 5 year plan to double

the number of full-time graduates

• Developing relationships with overseas HE partners to

forge stronger international links

Key Portfolio Overview

• 97.3% of beds located in cities

with at least two Universities, of which one is a top 30 ranked institution

• The properties are located on

average less than 15 minutes’ walk from either town centre or the nearest university campus

• Note that the Student Finance

Plc portfolio is part of the wider Student Roost Group portfolio, which is currently sized at over 16,500(1) beds to date

(1) Excluding developments

Total

13 Properties 5,684 Beds

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3.2 Student Finance Plc Portfolio Characteristics

Room Types

• Student Roost offers a wide range of room types for students, catering to a

broad spectrum of pricing points:

‒ Majority of rooms are ensuite or studios ‒ On average, there is a c.£64pw price range between the cheapest and most expensive offering in each university town or city

Typical Tenancy Terms

• Tenancies marketed in the 2017/18 academic year have an average length of
• c. 48 weeks (vs. 2016/17 – 47 weeks)
• Rents are inclusive of utilities bills, internet and contents insurance
• Offering an “all-inclusive” price represents a substantial advantage over the

alternative HMO private sector

Rolling Annual Agreements

• In 2017/18, c.20% of beds within the portfolio are operated under rolling

annual agreements with universities, education providers and other third parties ( vs. 2016/17 – c.11%)

• Agreements are in place in all markets within the Student Finance Plc portfolio

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3.3 Student Finance Plc Actual Performance

Actual Performance: Year to December 2017

• Geographically diverse, modern portfolio with high levels of occupancy
• The Student Finance Plc portfolio operated at 99% occupancy for the 2016/17 academic year
• Of the 13 properties within the Student Finance plc portfolio, 10 properties were 100% occupied for the 2016/17
• Weighted average bed rent was marketed at £122 per week for 2016/17
• Achieved year-to-date December 2017 annual gross rental income and net operating income of £34.3m and £24.5m, respectively

(1) Based on the academic year up to September 2017

Asset Market

• No. of

Beds Occupancy %(1)

• Avg. Weekly

Rent (£pbpw)(1)

• Avg. Tenure

(no. weeks)(1) Brookland Leicester 255 100% 128 £ 48 Eastern Boulevard Leicester 80 100% 127 £ 47 Newarke Leicester 284 100% 129 £ 48 Queens Court Leicester 143 100% 86 £ 48 Regents Court Leicester 182 100% 90 £ 48 The Summit Leicester 369 100% 137 £ 48 Upperton Road Leicester 536 100% 125 £ 47 Nottingham Two Nottingham 1,096 100% 128 £ 47 Trinity Square Nottingham 700 100% 128 £ 47 Newcastle 1 Newcastle 371 91% 148 £ 50 Sheffield 2 Sheffield 520 100% 104 £ 48 Sheffield 3 Sheffield 992 99% 118 £ 43 Snowdon Hall Wrexham 156 99% 67 £ 42 Total Student Finance Plc Portfolio 5,684 99% 122 £ 47 Year to December 2017

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3.4 Current Year Performance

Current Year Performance

• The Student Finance Plc is expected to deliver occupancy of 99% in 2017/18 academic year
• Estimated bed rent per week for 2017/18 sold at 4-5% higher than 2016/17 rates

Asset

• No. of

Properties AY 2017/18 Occupancy % Brookland 100% Eastern Boulevard 100% Newarke 100% Queens Court 100% Regents Court 100% The Summit 100% Upperton Road 100% Nottingham Two 100% Trinity Square 100% Newcastle 1 99% Sheffield 2 95% (1) Sheffield 3 97% (1) Snowdon Hall 100% Total Student Finance Plc Portfolio 13 99%

(1) Short-term occupancy impact of asset repositioning capital works taking place at Sheffield 3 in Q3 and Q4 AY 2016/17 and requirement to refurbish a number of flats in Q2 and Q3 AY 2017/18. AY 2018/18 leasing expected to return to normal with works completed

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16,580 20,438 1,153 4,172 5,571 5,684 3,858

• 5,000

10,000 15,000 20,000 25,000 Apr-16 Sep-16 Mar-17 Feb-18 Operating Assets Developments Total

• No. of beds

3.5 Student Roost Group Portfolio

Highlights

• Group Portfolio has grown from 5,600 beds across 5 regional

markets to over 20,000(1) beds located across 18 regional markets within a span of two years

• Current Student Finance bond security remains the originally charged

5,684 bed across 13 properties

At completion of under construction forward fund transaction Assets included in the bond security (x) Denotes no. of assets in city Aberdeen 976 beds (2) Edinburgh 331 beds (3) Newcastle 194 beds (1) + 371 beds (1) York 356 beds (1) Glasgow 2,390 beds (6) Belfast 2,332 beds (5) Sheffield 1,357 beds (3) + 1,512 beds (2) Liverpool 1,557 beds (5) Wrexham 156 beds (1) Nottingham 164 beds (1) + 1,796 beds (2) Leicester 1,849 beds (7) Poole 308 beds (1) Birmingham 1,392 beds (2) Bath 104 beds (1) Bournemouth 454 beds (1) Southampton 283 beds (1) Chester 736 beds (2) Durham 200 beds (1) London 527 beds (1) Swansea 722 beds (2)

Historical Bed Evolution

(1) Including developments

• No. of

Properties AY 2017/18 Occupancy % Financing Maturity Date Total Student Finance Plc Portfolio 13 99% Sep-24 Follow On Investments Acquired in Sep-16 3 100% Mar-19 Acquired in Mar-17 13 99% Apr-19 Acquired in Feb-18 16 92% Jan-21 Total Operating Assets 45 97% Developments 7 n/a Total Student Roost Group Portfolio 52

SECTION 4 – FINANCIAL COVENANTS

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4.1 Financial Covenants

* LTV is calculated based on the aggregate principal amount outstanding of the Net Senior Debt bears to aggregate market value of the properties calculated by reference to the most recent valuation. Net Senior Debt means the aggregate amount outstanding of the senior debt minus cash deposits held in the Defeasance Account, the Cure Account, all of the Disposal Accounts and the Lock-Up account

• All financial covenants are currently in compliance and no trigger events have occurred

Historical NOI Interest Cover

• Historical ICR is calculated based on an annualised basis using 7 months of actual NOI from March 2017 to October 2017 and

actual finance costs incurred Projected NOI Interest Cover

• Projected ICR is based on the 12-month forward looking operating budget to October 2018

Loan to Value

• Current LTV based on the external valuation completed as of 30 September 2016
• External desktop valuation as of 31 December 2017 currently in progress

Actual Covenant Trigger Event Historical NOI ICR 3.29x ≥ 1.50x < 1.75x Projected NOI ICR 3.83x ≥ 1.50x < 1.75x Loan to Value 53.2% N/A > 70%

SECTION 5 – OPERATIONAL UPDATE

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5.1 Operational Update

Internalisation

• Facilities management (“FM”) and letting services, including sales and

marketing, have been bought in-house during the year, with the exception of the Leicester properties (sales and marketing continued to be provided by SuLets)

• Target to complete the internalisation, including the back office finance

function, by the end of this year

• Benefits of internalisation include Improved process efficiency and reduction in
• verall corporate costs

Other Business Initiatives

• Opened HQ office in Birmingham in November 2017
• Strong recruitment progress through expansion of corporate platform from 5

employees to now over 40 corporate employees to date

Capital Investments

• Management has employed a robust lifecycle capital expenditure programme
• Strategy implemented to ensure funds are spent across all areas of the

portfolio against “Value Add”, “Cyclical” or “Defensive” criteria

• Lifecycle capex supported by a Sinking Fund, sized at 3% of Rental Income
• In addition to the capex supported by the Sinking Fund, C.£1.6m was invested

across 3 of the assets during the year to ensure best-in-class facilities and a student-focused service

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5.2 Capital Investments and Projects Sheffield 3 Value Enhancements Before After

Cost: £1.4 million

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5.3 Capital Investments and Projects Upperton Road Capital Project Before After

Cost: £0.2 million

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5.4 Capital Investments and Projects Nottingham 2 Capital Project Before After

Cost: £0.1 million

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5.5 Brand and Website

Brand Launch

• Student Roost brand launched in mid-September
• All properties re-branded
• Full digital and campaign brand marketing plans launched
• PR activities commenced

Website

• New website and booking system launched in early November
• Unique website visitors increased in-line with expectations
• Social Media, referral website, link-building and PPC strategies all

launched to drive leasing across key booking months

SECTION 5 – SUMMARY

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5.1 Summary

Strong historical performance – occupancy of 99% in year to September 2017 Excellent progress on business initiatives – developing strong team, internalisation, capex development and brand/website Future opportunity to add newly acquired assets to future bond issuances

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Current performance – expected occupancy of 99% in year to September 2018

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APPENDIX - CONTACTS

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Financial Calendar and Contacts

Contacts

Jeannie Wong Chief Financial Officer Tel: 0121 726 5086 Email: jeannie.wong@studentroost.co.uk Sarah Moist Head of Legal Tel: 0121 726 5095 Email: sarah.moist@studentroost.co.uk

Financial Calendar

Next investor presentation scheduled for late October 2018